Micro Final (Exercises, Tests and Quizzes)

$15; 30

(Figure: Pollution and Efficiency) Look at the figure Pollution and Efficiency. In this market, whose sulfur emissions are a result of production, an efficient solution takes place at a price of _____ and a quantity of _____.

bcge

(Figure: Price Controls) Look at the graph above, Price Controls. The consumer surplus lost to a price floor at point b is equal to the area:

$2.50 and 300 gallons

(Figure: Demand and Supply of Gasoline) Look at the figure Demand and Supply of Gasoline. The initial equilibrium price and quantity (at intersection of S1 and D) of gasoline are:

price-elastic

(Figure: Demand for Notebook Computers) Look at the figure The Demand for Notebook Computers. The change in total revenue resulting from a change in price from P to T suggests that demand is:

increasing returns to scale

(Figure: Long-Run Average Cost) Look at the figure Long-Run Average Cost. This firm has _____ in the output region from 0 to A.

40; MSB < MSC

(Figure: Pollution and Efficiency) Look at the figure Pollution and Efficiency. If this market, whose sulfur emissions are a result of production, produced _____ units of emissions, then _____.

(de) * Q2

(Figure: Prices, Cost Curves, and Profits) Look at the figure Prices, Cost Curves, and Profits. If the price is P2 and the firm is profit-maximizing, then the firm's profit is:

$80

(Figure: Producer Surplus III) Look at the figure Producer Surplus III. If the price of the good is $4, producer surplus will equal:

the shortage of rental units is the distance Q3 - Q1.

(Figure: Rent Controls) Look at the figure above, "Rent Controls." If rent controls are set at Rent1:

marginal

(Figure: Short-Run Costs) Look at the figure Short-Run Costs. A is the _____ cost curve.

average fixed

(Figure: Short-Run Costs) Look at the figure Short-Run Costs. The vertical difference between curve B and curve C at any quantity of output is _____ cost.

R

(Figure: Short-Run Monopoly) Look at the figure Short-Run Monopoly. The profitmaximizing quantity of output is quantity:

Suppose the price of university sweatshirts increases from $10 to $20 and the quantity supplied increases from 20 to 30. The price elasticity of supply, using the midpoint formula, is:

0.60

If the price of a good increases by 20% and the quantity demanded changes by 15%, then the price elasticity of demand is equal to:

0.75

An attorney supplies 40 hours of work per week when her fee is $100 per hour but supplies 60 hours of work per week when her fee rises to $120 per hour. Using the midpoint formula, her elasticity of supply is equal to:

2.2

The only producer of chocolate bunnies in the world, Choco's Bunny Company, recently expanded its production capacity from 1,000 to 2,000 bunnies per day. If the price elasticity of demand for bunnies is 3.33, by how much will the company have to reduce its price to sell the additional 1,000 bunnies (by the midpoint method)

20%

The only producer of chocolate bunnies in the world, Choco's Bunny Company, recently expanded its production capacity from 1,000 to 2,000 bunnies per day. If the price elasticity of demand for bunnies is 3.33, by how much will the company have to reduce its price to sell the additional 1,000 bunnies (by the midpoint method)?

20%

If an economy is producing inside its Production Possibilities Frontier then,

it is using its resources inefficiently;

Marginal revenue for a monopolist is:

less than price

The short-run supply curve for a perfectly competitive firm is the ____ cost curve above the _____ price

marginal; shut down

At the long-run quantity of output, where the long-run average total cost curve is at its lowest point, it is tangent to the _____ of the corresponding short-run average total cost curve.

minimum

For a firm producing at any level of output LOWER THAN the most profitable one, an increase in output adds:

more to total revenue than to total cost

Which of the following is an example of a nonexcludable good?

national defense

An individual is MOST likely to be a free rider when a good is:

nonexcludable

Most neighborhood streets are illuminated at night by streetlights. The streetlights are _____ and _____. Therefore, they are likely to be _____ by the competitive market.

nonrival; nonexcludable; underprovided

If the income elasticity of demand for a good is positive, the good is said to be:

normal

Suppose that a monopoly firm is required to pay a new annual license fee to do business in its city and that the fee is somewhat less than the economic profit the firm is now earning. In response to the increase in fees, the firm will

not change its price

If drivers decide to make phone calls without considering the costs imposed on others, the:

number of phone calls made while driving will be more than the socially optimal quantity.

The marginal benefit you receive from a good is the maximum amount you are willing to pay for,

one more unit of good

The demand curve for a perfectly competitive firm is:

perfectly elastic

If a monopoly has a linear demand curve and is producing at the profit-maximizing level of output, at that level of output, demand is:

price-elastic

Maria wants to get rid of her bookshelf. She is willing to give it away, but her neighbor offers to pay $30 for it. Maria takes a:

producer surplus gain

The price elasticity of demand measures the responsiveness of the change in the: A

quantity demanded to a change in the price

The price elasticity of demand measures the responsiveness of the change in the:

quantity demanded to a change in the price.

A decrease in the price of eggs will result in an increase in the:

quantity of eggs demanded

According to the Coase theorem, when negative externalities are present, a market will:

reach an efficient solution if transaction costs are low and property rights are well-defined.

It is cheaper to grow strawberries in the summer. In the market for strawberries, equilibrium price of strawberries decreases, and the equilibrium quantity increases in the summer. This change in equilibrium quantity is caused by a ____________ curve, which causes a __________ curve.

shift to the right of the supply; movement along the demand

A perfectly competitive small organic farm produces 1,000 cauliflower heads in the short run. Its ATC = $6 and AFC = $2. The market price is $3 per head and is equal to MC. To maximize profits or minimize losses, this farm should:

shut down

If a Florida strawberry wholesaler operates in a perfectly competitive market, that wholesaler will have a _____ share of the market, and consumers will consider her strawberries and her competitors' strawberries to be _____. Therefore, _____ advertising will take place in this market.

small; standardized; little or no

The marginal benefit Julie receives from consuming a third chocolate bar is,

the maximum amount she is willing to pay for only the third chocolate bar

The short-run shut-down price is:

the minimum of the AVC curve

When a chef prepares a dinner for a customer, which of the following is physical capital?

the oven

The market for apples is in equilibrium at a price of $0.50 per pound. If the government imposes a price floor in the market at a price of $0.40 per pound

the price floor will not affect the market price or output

A shift of the demand curve for thin-crust pizza would NOT be caused by a change in:

the price of then-crust pizza

When farmers raise hogs, there are a number of external costs. In particular, hogs generate methane gas. Without government regulation, the equilibrium price and quantity of pigs raised means that:

the price will be less than the marginal social cost

We can measure total consumer surplus for good X as:

the sum of the individual consumer surpluses for all buyers of X.

Which factor is important in determining the price elasticity of supply?

the time the producer has to adjust inputs and outputs

When a farmer plants corn to send to market, which of the following is physical capital?

the tractors they use

Opportunity cost is:

the value of the best alternative forgone in making any choice

If at the current amount of pollution, its marginal social benefit is greater than its marginal social cost:

there is too little pollution

The marginal product of labor is all of the following EXCEPT:

total product divided by total labor

A perfectly competitive firm will continue producing in the short run as long as it can cover its _____ cost.

variable

Consider the market for bicycles. If the demand curve shifts to the right, and the supply curve shifts to the right, then we know that the equilibrium quantity _______, and the equilibrium price _________

will increase; may increase, decrease, or remain the same

A linear demand curve has:

Both elastic and inelastic price elasticities of demand

A monopolist responds to an increase in demand by _____ price and _____ output.

increasing; increasing

A(n) _____ is excludable and rival in consumption.

private good

Suppose the cost of 5 pencils is $2.50, but the cost of 6 pencils is $2.70. What is the marginal cost of the sixth pencil?

$0.20

Austin's total fixed cost at the bakery is $3,600 a month. Austin employs 20 workers and pays each worker $8 an hour. The marginal product of the twentieth worker is 12 iced cupcakes an hour. What is the marginal cost of the last cupcake produced by the last worker Austin hired?

$0.66

If a perfectly competitive firm increases production from 10 units to 11 units and the market price is $20 per unit, total revenue for 11 units is:

$220

Vonda and Aleiyah are shopping together at the mall for new jeans. Vonda is willing to pay $90 and Aleiyah is willing to pay $50 for a pair of jeans. If the price of jeans is $59, how much total consumer surplus is achieved in this market?

$31

average variable

(Figure: A Firm's Cost Curves) Look at the figure A Firm's Cost Curves. The curve labeled O represents the firm's _____ cost curve.

OFKD

(Figure: A Perfectly Competitive Firm in the Short Run) Look at the figure A Perfectly Competitive Firm in the Short Run. The firm's total cost of producing its most profitable level of output is:

3; total fixed costs

(Figure: Cost Curves for Corn Producers) Look at the figure Cost Curves for Corn Producers. The market for corn is perfectly competitive. If the price of a bushel of corn is $10, then in the short run the farmer will produce _____ bushels of corn and take an economic loss equal to _____.

4 bushels; profit; $0

(Figure: Cost Curves for Corn Producers) Look at the figure Cost Curves for Corn Producers. The market for corn is perfectly competitive. If the price of a bushel of corn is $14, in the short run, the farmer will produce _____ of corn and earn an economic _____ equal to _____.

decreases; decreases

(Figure: Costs and Profits for Tomato Producers) Look at the figure Costs and Profits for Tomato Producers. The market for tomatoes is perfectly competitive. The market price of a bushel of tomatoes is $18. If the market price falls to $16, the farmer's marginal revenue _____ and the profit-maximizing output _____.

at the old price of $2.50, there will be pressure for the price to fall.

(Figure: Demand and Supply of Gasoline) Look at the figure Demand and Supply of Gasoline. Given the equilibrium after a change in supply from S1 to S2:

A

(Figure: Supply and Demand in the Orange Juice Market) Look at the figure Supply and Demand in the Orange Juice Market. The market is currently in equilibrium at point C. Suppose a hurricane hits Florida, where oranges are grown. What will be the most likely new equilibrium point in the orange juice market?

a surplus equal to the distance AB.

(Figure: Supply and Demand) Look at the figure Supply and Demand. A price floor of P1 causes:

no change to the market

(Figure: Supply and Demand) Look at the figure above, "Supply and Demand." A price ceiling of P1 causes:

A to C

(Figure: Supply of Coconuts) Look at the figure Supply of Coconuts. An improvement in the technology used to harvest coconuts (e.g., a faster, less expensive coconut picker) would be represented in the figure as a movement from:

E to B

(Figure: Supply of Coconuts) Look at the figure Supply of Coconuts. If the prices of inputs (e.g., labor, fertilizer, and fuel) used to produce and transport coconuts decreased, it would be represented in the figure as a movement from:

surplus; 8000

(Figure: The Demand and Supply of Wheat) Look at the figure The Demand and Supply of Wheat. If a price of $10 temporarily exists in this market, a _____ of _____ bushels will result.

$90.00

(Figure: The Gains from Trade) Look at the figure The Gains from Trade. What is the total surplus in this market when the demand curve is D2 and the market is in equilibrium?

surplus; 3

(Figure: The Market for Butter) Look at the figure above, "The Market for Butter." If a government price floor at $1.10 is imposed on this market, an inefficiency will result in the form of a _____ of _____ million pounds of butter.

$400

(Figure: The Market for Hamburgers) The figure above, "The Market for Hamburgers," shows the weekly market for hamburgers in Tuscaloosa. If 400 hamburgers are sold, consumer surplus will equal:

P3; Q3; Q1

(Figure: The Market for Hybrid Cars) Look at the figure The Market for Hybrid Cars. If there were a binding price ceiling in the market for hybrid cars, one possible price would be equal to _____; consumers would demand _____; and producers would supply _____.

f+d+e

(Figure: The Market for Hybrid Cars) Look at the figure The Market for Hybrid Cars. What area represents consumer surplus if there is a binding price floor at P1?

q2; incur a loss

(Figure: The Profit-Maximizing Firm in the Short Run) Look at the figure The ProfitMaximizing Firm in the Short Run. If the market price is P3, the firm will produce quantity _____ and _____ in the short run

shut down and incur a loss

(Figure: The Profit-Maximizing Firm in the Short Run) Look at the figure The ProfitMaximizing Firm in the Short Run. If the market price is less than P2, the firm will _____ in the short run.

MC

(Figure: The Profit-Maximizing Firm in the Short Run) Look at the figure The ProfitMaximizing Firm in the Short Run. M is the _____ curve

$17.50

(Figure: The Shrimp Market) Look at the figure The Shrimp Market. If the government imposes a quota limiting sales of shrimp to 250 pounds, it will have the same effect on transactions as a price floor of:

falling

(Figure: The Total Product) Look at the figure The Total Product. Between points A and B the marginal product of labor is:

too much pollution is produced

(Table: Coal Mine Pollution) The table Coal Mine Pollution shows the marginal social benefit and cost of various amounts of pollution from a coal mine. If 5 tons of pollution is produced:

$20

(Table: Consumer Surplus and Phantom Tickets) The table Consumer Surplus and Phantom Tickets shows each student's willingness to pay for a Phantom of the Opera ticket. Assume that each student wants to buy one ticket. If the box office price of a ticket to see Phantom of the Opera is $130 and there is no other market for tickets, the total consumer surplus for the five students is:

shortage of 0.6

(Table: Market for Apartments) Look at the table Market for Apartments. If a price ceiling of $700 is imposed on this market, the result will be an inefficiency in the form of a _____ million apartments.

$1.50

(Table: Market for Fried Twinkies) Look at the table above, the "Market for Fried Twinkies." Suppose the government decides to reduce fried Twinkie consumption as part of a war on obesity. After careful study, the government decides to impose a quota of 5,000 on production of fried Twinkies this year. What price will producers charge if they obey the quota law?

1.2

(Table: Market for Pizza) If income changes from $1,000 to $1,400 per month, by the midpoint method, the income elasticity of demand at a price of $10 per pizza is:

1

(Table: Market for Pizza) Look at the table Market for Pizza and use the midpoint method. The price elasticity of demand for pizza between $14 and $12 per pizza when income is $1,000 per month is:

1.5

(Table: Market for Pizza) Look at the table Market for Pizza. When income changes from $1,000 to $1,400 per month, the income elasticity of demand for pizza, by the midpoint method, at a price of $14 per pizza is:

$14

(Table: Pumpkin Market) There are two consumers, Andy and Ben, in the market for pumpkins. Their willingness to pay for each pumpken is shown in the table Pumpkin Market. There are two producers of pumpkins, Cindy and Diane, and their costs are also shown. The equilibrium price for pumpkins is $8 and the equilibrium quantity is 5. At the equilibrium price and quantity, total producer surplus is:

5

(Table: Soybean Cost) Look at the table Soybean Cost. If the market price of a bushel of soybeans is $15, how many bushels will the farmer produce to maximize short-run profit?

8 cans

(Table: The Market for Soda) Look at the table The Market for Soda. If the government imposes a price ceiling of $1 per can of soda, the quantity of soda supplied will be:

Which of the following would NOT lead to an outward shift in the production possibilities frontier?

An increase in the price of oil

$4;4

(Table: The Market for Taxi Rides) Look at the table The Market for Taxi Rides. If a government quota limit at 6 million rides is imposed, the quota rent accruing to the owner of a taxi medallion will be _____ per ride, but there will be a total missed opportunity (inefficiency) to consumers and producers of _____ million rides.

$1;1

(Table: The Market for Taxi Rides) Look at the table above, "The Market for Taxi Rides." If a government quota limit at 9 million rides is imposed, the quota rent that will accrue to the owner of a taxi medallion will be _____ per ride, but there will be a total missed opportunity (inefficiency) to consumers and producers of _____ million rides

$190

(Table: Total Cost Data) Look at the table Total Cost Data. What is the total variable cost for this bicycle firm when the firm produces 5 bicycles?

Each month Jessica buys exactly 15 Big Macs regardless of the price. Jessica's price elasticity of demand for Big Macs is:

0

The price of gasoline rises 5% and the quantity of gasoline purchased falls 1%. The price elasticity of demand is equal to _____, and demand is described as _____.

0.2; inelastic

Each month Jacquelyn spends exactly $50 on ice cream regardless of the price of each container. Jacquelyn's price elasticity of demand for ice cream is:

1

Suppose you manage a convenience mart and are in charge of ordering products, but the home office sets the prices. In your area, the income elasticity of demand for peanut butter is -0.5. Because of local factory closings, you expect local incomes to decrease by 20% on average in the next month. As a result, you should stock _____ peanut butter.

10% more

Suppose that the first four workers generate corresponding total outputs of baby diapers of 200, 350, 450, and 500, respectively. The marginal product of the second worker is:

150

Egg producers know that the elasticity of demand for eggs is 0.1. If they want to increase sales by 5%, they will have to lower price by:

50%

Which of the following statements is CORRECT?

A change in quantity demanded is a movement along the demand curve, and a change in demand is a shift of the demand curve

Specialization and trade should lead to all of the following EXCEPT:

A decrease in total economic output;

Which of the following can a wealthy nation, like the U.S.A., expect from specialization and international trade?

A higher standard of living in the U.S.A.

When the economy turns down and the incomes of many people decrease, vacationers are more likely to take car trips than to fly. Which of the following provides one possible explanation for this phenomenon?

Air travel is a normal good and travel by car is an inferior good.

In one week, Alexa can either build 6 decks or assemble 4 playsets. In one day, Bob can either build 3 decks or assemble 2 playsets. Which of the following statements is true?

Alexa has an absolute advantage in building decks and assembling playsets;

Suppose that in one week, Alice can produce 5 pairs of shoes or 4 bookshelves, while Roger can produce 10 pairs of shoes or 6 bookshelves. Which of the following statements is correct?

Alice should specialize in bookcases, Roger should specialize in shoes, and they should trade

Consider supply and demand in the market for oranges. Which of the following changes would, in the long run, lead to a movement to the right along the demand curve.

An improvement in technology that decreases the cost of producing oranges

Which of the following would NOT lead to an outward shift in the production possibilities frontier? a.An increase in the average level of education of people in the labor force; b.Technological advances in the production of food; c.An increase in the price of food; d.A decrease in the unemployment rate.

An increase in the price of food

Which of the following would lead to an outward shift in the U.S.A.'s production possibilities frontier?

An increase in the supply of labor through increased immigration in the U.S.A.;

Which of the following cannot shift a country's production possibilities frontier outward? a.New technology that improves makes the cost of production cheaper; b. An increase in their income; c. An increase in their population's average level of education; d. An increase in unemployment.

An increase in unemployment

Suppose the cross-price elasticity between demand for Burger King burgers and the price of McDonald's burgers is 0.8. If McDonald's increases the price of its burgers by 10%

Burger King will sell 8% more burgers.

In one day, Donald can either harvest 10 bushels of corn or 10 bushels of soybeans. In one day, Mike can either harvest 12 bushels of corn or 12 bushels of soybeans. Donald and Mike,

Cannot both gain from specialization and exchange;

Which of the following cannot shift a country's production possibilities frontier inward?

Development of a more effective vaccine for all known types of the flu.

Which of the following is the best example of making a choice at the margin?

Drinking another cup of coffee

Gains from trade arise from,

Each country specializing in production and then trading what they produce;

Which of the following statements is TRUE about economic models?

Every economic model is based on a set of assumptions.

Which of the following statements are correct? I. The "highest-valued alternative given up" is known as the opportunity cost of making a choice. II. Wealthy economies do not experience opportunity costs. III. Scarcity creates opportunity costs.

I and III

Suppose the price of cereal rose by 25% and the quantity of milk sold decreased by 50%. We know that the:

cross-price elasticity between cereal and milk is -2

A President of the United States promises to simultaneously produce more national defense goods without any decreases in the production of other goods. Under which of the following conditions could this promise be valid?

If the United States is currently producing at a point inside its production possibilities frontier.

The mayor of Gotham city, worried about a potential epidemic of deadly influenza this winter, asks an economic adviser a series of questions. Which the following questions is normative?

If there is a shortage of vaccine in the city, whom should we vaccinate first the elderly or the very young? (Assume that a person from one group has an equal likelihood of dying from influenza as a person from the other group.)

A, B and C

In Figure 1 above, which of the following points are both feasible and efficient?

Production possibilities frontier

In Figure 1 below, the curve is know as the

The country is specializing in the production of one of the goods, exporting some of that good and importing some of the other good.

In the economy depicted in Figure 1 above, if the country were consuming the bundle of goods represented by point E, which of the following statements MUST be TRUE?

An economic model:

Is a simplified version of reality used to understand real‐world economic conditions

The definition of Economic efficiency is that,

It is not possible to make one person better off without making someone else worse off

Panel B

Look at the figure Shifts in Demand and Supply III. Suppose severe weather destroys most of the soybean crops. Which panel BEST describes how this will affect the market for soybeans?

Panel B

Look at the figure Shifts in Demand and Supply III. Suppose the price of coltan, an input in making smart phones increases. Which panel BEST describes how this will affect the market for smart phones?

Panel A

Look at the figure Shifts in Demand and Supply III. The figure shows how supply and demand might shift in response to specific events. Suppose the technology for producing snowboards improves. Which panel BEST describes how this will affect the market for snowboards?

Panel D

Look at the figure Shifts in Demand and Supply III. The figure shows how supply and demand might shift in response to specific events. Suppose the technology for producing snowboards improves. Which panel BEST describes how this will affect the market for toboggans, a substitute in the consumption of snowboards?

In one day, Luke can bake 10 cakes and Amanda can bake 9 cakes. We know that _____ has a(n) ______ advantage in baking cakes.

Luke; Absolute

If the state government allocates additional spending on education, the opportunity cost is:

Measured in terms of the best alternative uses for that money

The efficient rate of emissions occurs when:

Net social benefit cannot be increased by producing one more, or one less, unit of emissions.

Economists use the term equilibrium to describe the situation in which:

No individual would be better off taking a different action or no individual has the incentive to change his or her behavior

Freshwater is considered scarce good because:

Not enough of it is available for all needs.

An economy is efficient if it is:

Not possible to produce more of one good without producing less of another good

Which of the following statements is not a normative statement?

Out of every $100 earned in the U.S.A. in 2015, more than $17 was spent on health care;

This economy could not consume at Point E, except perhaps through trading with another country.

Refer to the economy depicted in the figure above. Given the current production technology, which of the following statements is TRUE?

Point E represents an unattainable production level for this economy

Refer to the figure below. Which of the following statements is TRUE?

Points A, B, and C all represent efficient production levels for this economy;

Refer to the figure below. Which of the following statements is true:

Marginal analysis:

Refers to decisions about whether to do a bit more or a bit less of an activity, helps when making a choice about "how much," and involves trade‐offs

Which of the following is NOTtrue? a.The real cost of a choice is what you must give up to get that choice; b.People typically make choices that will make themselves better off; c.Resources are scarce when they can satisfy everyone's wants d.Rational people use marginal analysis when making decisions about "how much" to buy or produce.

Resources are scarce when they can satisfy everyone's wants;

Gains from trade arise because of:

Specialization in production;

Which of the following could lead to an outward shift in the production possibilities frontier (PPF)?

Technological advances in the growing corn;

If the opportunity cost of producing airplanes is lower in the U.S.A. than in Mexico, and the opportunity cost of producing cars is lower in Mexico than in the U.S.A., then

The U.S.A. should produce and export airplanes, and import cars from Mexico;

The long-run average total cost curve is tangent to an infinite number of short-run _____ cost curves.

average total

Which of the following is NOT represented in the circular‐flow diagram?

The flow of money from households to firms when the household sells their labor

Which of the following is a solution to externalities?

The government offers free childhood immunizations. The externality is that an immunized child is less likely to transmit disease to others.

A student is studying two hours a day to prepare for a test and is debating whether to study an extra hour. Which of the following statements is TRUE?

The student's marginal benefit is the benefit she receives from studying the extra hour.

The opportunity cost of attending university is,

The sum of the cost of tuition, textbooks, and the income given up from not working when going to university;

The opportunity cost of a box of donuts to an individual is,

The value of what they would have bought had they not bought donuts.

If you have a monthly bus pass, which of the following is a measure of the marginal benefit you receive from taking the bus?

The value to you of the last bus trip taken;

Scarcity in Economics means that:

We do not have sufficient resources to produce all of the goods and services that we want

Margo spends $10,000 on one year's college tuition and books. The opportunity cost of spending one year in college for Margo is:

Whatever she would have purchased with the $10,000 plus whatever she would have earned had she not been in college.

Which of the following statements is FALSE?

When the marginal product of labor is upward-sloping, the marginal cost curve is upward-sloping.

If the estimated price elasticity of demand for foreign travel is 4:

a 20% decrease in the price of foreign travel will increase quantity demanded by 80%.

Which of the following is NOT a barrier to entry?

a ban on certain kinds of advertising

Producers will supply an inefficiently low quality of a good if the government imposes:

a binding price ceiling

Consider supply and demand in the market for orange juice. Which of the following changes would cause a movement to the right along the demand curve.

a decrease in the price of orange juice

Which of the following goods is most likely a common resource

a public park

A total product curve indicates the relationship between _____ when all other inputs are fixed

a variable input and output

Positive economics is,

about facts

A normative statement is,

about what ought to be

An increase in the supply of a good is caused by:

an increase in the number of sellers

In much of the country, homeowners choose to heat their houses with either natural gas or electricity. Which of the following would cause an increase in the demand for natural gas?

an increase in the price of electricity

If a monopolist is producing a quantity that generates MC = P, then profit:

can be increased by decreasing production

If a monopolist is producing a quantity that generates MC > MR, then profit:

can be increased by increasing price

If a perfectly competitive firm is producing a quantity where MC < MR, then profit:

can be increased by increasing production

Suppose a monopoly is producing output so that marginal revenue equals marginal cost. If the monopolist reduces output, it:

can charge a higher price

Critics of the National Collegiate Athletic Association (NCAA) argue that the NCAA monopolizes college athletics and prevents student-athletes from earning money while in college. If this is true, what type of entry barrier does the NCAA have?

control of a scarce resource or input

The market for salmon is in equilibrium. A price ceiling, a price floor, and a quota limit in this market would all cause:

deadweight loss arising from a quantity exchanged that is less than the equilibrium quantity

If the government allowed only one airline to serve the entire U.S. market, there would be a _____ loss associated with _____ efficiency in the airline industry.

deadweight; reduced

Marginal cost _____ over the range of increasing marginal returns and _____ over the range of diminishing marginal returns

decreases; increases

A monopolist responds to a decrease in demand by _____ price and _____ output

decreasing; decreasing

Zoe's Bakery operates in a perfectly competitive industry and has standard cost curves. The variable costs at Zoe's Bakery increase, so all of the cost curves (except fixed cost) shift upward. The demand for Zoe's pastries does not change, nor does the firm shut down. To maximize profits after the variable cost increase, Zoe's Bakery will _____ its price and _____ its level of production.

do nothing to; decrease

One of the major differences between a monopolist and a purely competitive firm is that the monopolist has a _____ demand curve, while the purely competitive firm has a _____ demand curve

downward-sloping; perfectly elastic

Barriers to entry are a reason a monopoly:

earns an economic profit in the long run

Suppose that you build a new jumbo jet that can carry five times more passengers than any other competitor. You have high fixed costs due to the quantity of capital used to build the jets, and average cost is decreasing for all levels of demand. In this case, your monopoly would result from

economies of scale

For the same amount of pollution emitted, an emissions tax is said to be more efficient than an environmental standard because all polluters:

emit pollution up to the point at which the marginal benefit of polluting is equal to the emissions tax.

Activities that generate external costs will likely be carried out at levels that _____ those that would be efficient.

exceed

A private good is _____ in consumption.

excludable and rival

In 1999, a judge declared that Microsoft was a monopolist. Assuming that Microsoft has a linear demand curve and that it is maximizing its profits at its current level of output, we may conclude that if Microsoft were to increase its price, its total revenue would:

fall

Which of the following goods is most likely a public good?

fire protection

In one day, Stan can either plow 10 acres or plant 20 acres.In one day, Chris can either plow 15 acres or plant 15 acres. Stan and Chris can,

gain from exchange if Stan specializes in planting and Chris in plowing

Once diminishing returns have set in, as output increases, the total cost curve:

gets steeper

If two goods are substitutes, their cross-price elasticity of demand should be:

greater than 0

A natural monopoly exists whenever a single firm:

has economies of scale over the entire range of production that is relevant to its market.

Suppose the United States removes the sugar quotas and the market price of sugar drops. Since sugar is an input in candy, in the candy bar market, we would expect consumer surplus to:

increase

A monopoly is producing output so that average total cost is $30, marginal revenue is $40, and the price is $50. If ATC is at its minimum level and the ATC curve is U-shaped, to maximize profits this firm should:

increase output

Assume that fish and lemon are complements in consumption on the island nation of Poisson, which is a closed economy (i.e., they do not trade with other nations). If a quota limit is imposed on the amount of fish allowed to be caught, and the quota is set at a quantity below equilibrium, the price of fish will _____ while the price of the lemon will _____.

increase; decrease

Suppose the U.S. government imposes a binding quota on the number of Japanese-made cars allowed into the United States. Assuming that Japanese-made cars and U.S.-made cars are substitutes in consumption, we would expect the price of Japanese cars to _____ and the price of U.S.-made cars to _____.

increase; increase

Suppose that you build a high-speed, magnetically powered transportation system from New York to Los Angeles, and you are the only firm providing this service. High fixed costs resulting from the enormous quantity of capital used in this system enable decreasing average cost for any conceivable level of demand. Your monopoly would result from:

increasing returns to scale

The governor wants to levy a $1 excise tax on some good—he doesn't care which—but he does want to minimize the deadweight loss. The deadweight loss will be least when the demand curve is _____ and the supply curve is _____.

inelastic; inelastic

A negative externality:

is an uncompensated cost imposed by an individual or firm on others

The marginal revenue received by a firm in a perfectly competitive market:

is equal to its average revenue

Suppose the cross-price elasticity of demand for butter and margarine is equal to 0.96 but the cross-price elasticity for water and lemons is -0.13. This means that butter and margarine are _____, while water and lemons are _____.

substitutes; complements

In the short run, if a monopoly is forced to charge a price equal to marginal cost:

the dead weight loss will decrease

A positive statement is a statement about,

the facts

The demand curve for a monopoly is:

the industry demand curve

When individuals take external costs and benefits into account

the internalize the externality

Given the general agreement that pollution is undesirable and social welfare is increased by reducing pollution, the optimal level of pollution in a society is:

the level at which the marginal social cost is equal to the marginal social benefit

When positive externalities exist, such as in the case of a vaccine for meningitis

the marginal social benefit curve is above the marginal private benefit curve.

Maximum total surplus in the market for chocolate occurs when:

the market is in equilibrium